FDD Talk: Club Pilates Franchise Review (Financial Performance Analysis, Costs, Fees, and More)

In this FDD Talk post, you’ll learn the following:

• Section I – Background information on the Club Pilates franchise opportunity, including relevant news updates

• Section II – Estimated initial investment for a Club Pilates franchise, based on Item 7 of the company’s 2019 FDD

• Section III – Initial franchise fee, royalty fee, marketing fee, and other fees for a Club Pilates franchise, based on Items 5 and 6 of the company’s 2019 FDD

• Section IV – Number of franchised and company-owned Club Pilates outlets at the start of the year and the end of the year for 2016, 2017, and 2018, based on Item 20 of the company’s 2019 FDD

• Section V – Presentation and analysis of Club Pilates’ financial performance representations, based on Item 19 of the company’s 2019 FDD, including information on the:

• 2018 average gross revenue for the 188 franchisee-owned Club Pilates Studios that were open and operating for the period beginning January 1, 2018 and ending December 31, 2018, and operated utilizing at least 12 reformers as required by the current franchise offering and System (“Franchisee-Owned Representative Studios”)

• 2018 average gross revenue for the 140 franchisee-owned Club Pilates Studios that were open and operating for the period beginning January 1, 2018 and ending December 31, 2018, and operated utilizing at least 12 reformers as required by the current franchise offering and System, as well as all “New Model” updates to the System implemented in 2015 (“Franchisee-Owned New Model Studios”)

Section I – Background Information

14 Things You Need to Know About the Club Pilates Franchise

Celebrates 500th Active Studio with Private Training Giveaway

1.  At the beginning of March 2019, Club Pilates celebrated its 500th active studio by giving away 500 private training sessions. Private training sessions are available at all Club Pilates studios nationwide and offer all participants the opportunity to receive individualized guidance and specialized programming and subsequently, more rapid results. Clients receive customized workouts that are performed on the unique Pilates apparatuses, including the Reformer, Cadillac, EXO Chair, and more.

2.  Club Pilates also offers group reformer Pilates classes, providing members a tailored, high-end workout at an affordable cost.

3.  The 500 private training sessions giveaway, open to both members and those not yet practicing Pilates, ran through March 16.

4.  Mike Gray, SVP of operations for Club Pilates, said, “At Club Pilates, we believe that everybody needs Pilates. With 500 active studios, we now offer more opportunities to bring the benefits of Pilates to more people than ever before. We’re celebrating our 500th studio by giving away 500 Private Training sessions. Private Training is one of the best introductions to Pilates as the sessions are completely customized to your body and to your needs.”

5.  Club Pilates’ growth trajectory is expected to continue into 2020. There are an additional 150 studios projected to open in 2019 and another 150 projected to open in 2020.

Collaborates with Elements Massage to Reinforce Self-Care

6.  In mid-August 2019, Club Pilates announced a collaboration with Elements Massage. From Thursday, August 15 through Saturday, August 31, 2019, consumers were invited to prepare for the back-to-school chaos with a free intro Pilates class and a $69 one-hour massage session (rates varied depending on the studio) for new and returning clients. This limited-time collaboration offered an opportunity to prioritize the combination of fitness and relaxation as the summer came to an end.

7.  Jessica Yarmey, chief marketing officer of Club Pilates, said, “As families celebrate the summer, healthy habits and fitness goals tend to be forgotten. The new school year marks an opportunity to return to our healthier routines. By collaborating with Elements Massage, we are helping our communities return to a positive lifestyle, that includes self-care for the mind, body and soul.”

8.  Consumers interested in taking advantage of this offer needed to mention the promotion code “BACK2U” when booking their massage at participating Elements Massage studios. Kirsten Helgeland, vice president of marketing for Elements Massage, added, “Elements Massage personalizes every part of your massage experience whether you’re looking for pain relief, relaxation, or mental wellness. Our goal is to create a space where people feel revitalized and a sense of restoration. We’re excited about this opportunity to collaborate with Club Pilates, creating a well-rounded wellness package as the summer comes to a close and life ramps back up.”

Hosts Nationwide Open House Across All U.S. Locations

9.  In early October 2019, Club Pilates hosted open house events at each of its studios nationwide. The open houses offered intro level Pilates classes, free of charge, in addition to studio tours, instructor meet and greets, and more. The Open House celebrated the company’s continued reign as the fastest-growing Pilates franchise and supports the brand’s mission to help more people experience the power of Pilates by making it more affordable and accessible.

10. Jessica Yarmey, chief marketing officer of Club Pilates, said, “We’re excited to open our doors this weekend to show everybody just how welcoming and accessible Club Pilates is. There’s truly a workout that will work for every fitness level from beginner to advanced athlete. With our existing footprint and plans to open even more studios by year end, there’s a Club Pilates in your neighborhood, ready to become your new home away from home!”

Company History

11.  Club Pilates was founded in 2007 by Allison Beardsley in San Diego, California. Beardsley, who is passionate about fitness, developed the Club Pilates workout program by using techniques from Joseph Pilates’ original Reformer-based Contrology Method. However, Beardsley made her program more affordable and used state-of-the-art equipment as well as group practice.

12.  The Club Pilates concept was a hit and Beardsley decided to start franchising in 2012. However, Beardsley soon realized that she was not equipped to handle the company’s growth and success and decided to sell Club Pilates. In 2015, Beardsley sold Club Pilates to LAG Fit (now Xponential Fitness), a franchise development firm (owned by Anthony Geisler) that specializes in the acquisition and expansion of boutique wellness concepts. As part of the deal, Beardsley retains 25 percent ownership of Club Pilates and remains involved in the company as co-founder.

13.  Under Geisler’s leadership, Club Pilates achieved exponential growth and made changes to attract a wider range of clients, especially men. Geisler gave the Club Pilates gym a more neutral makeover and changed the pricing from a pay-by-class system to a monthly membership fee that gives the company a recurring revenue stream. All of these changes have helped Club Pilates grow across the United States and Canada.

Entrepreneur’s Franchise 500

14.  Club Pilates ranked No. 134 on Entrepreneur’s 2019 Franchise 500 list.

Section II – Estimated Costs

• Please click here for detailed estimates of Club Pilates franchise costs, based on Item 7 of the company’s 2019 FDD.

Section III – Initial Franchise Fee, Royalty Fee, Marketing Fee, and Other Fees

• Please click here for detailed information on Club Pilates’ initial franchise fee, royalty fee, marketing fee, and other fees, based on Items 5 and 6 of the company’s 2019 FDD.

Section IV – Number of Franchised and Company-Owned Outlets

Franchised

2016

• Outlets at the Start of the Year:  39
• Outlets at the End of the Year:  74
• Net Change:  +35

2017

• Outlets at the Start of the Year:  74
• Outlets at the End of the Year:  203
• Net Change:  +129

2018

• Outlets at the Start of the Year:  203
• Outlets at the End of the Year:  379
• Net Change:  +176

Company-Owned

2016

• Outlets at the Start of the Year:  4
• Outlets at the End of the Year:  3
• Net Change:  -1

2017

• Outlets at the Start of the Year:  3
• Outlets at the End of the Year:  0
• Net Change:  -3

2018

• Outlets at the Start of the Year:  0
• Outlets at the End of the Year:  0
• Net Change:  0

Section V – Financial Performance Representations (Item 19, 2019 FDD) and Analysis

• This Item 19 discloses the historical financial information regarding the 188 Studios that were (a) open and operating for the period beginning January 1, 2018 and ending December 31, 2018 (the “Measurement Period”), and (b) operated by Club Pilates’ System franchisees utilizing at least 12 reformers as required by the current franchise offering and System (collectively, the “Representative Franchised Studios”).

• Of the 379 franchised Studios operating as of December 31, 2018, the franchisor excluded the information of (a) 179 Studios from this Item on the grounds that they were not open and operating throughout the entire Measurement Period (either because they opened or closed at some point during the Measurement Period), and (b) 12 additional Studios from this Item on the grounds that they did not utilize at least 12 reformers in their operations as required under the current System standards and specifications (and as part of the standard franchise offered under the 2019 Disclosure Document).

Average Gross Revenue Amongst Franchisee-Owned Representative Studios Over the Measurement Period

• The table below discloses the average gross revenue amongst (a) the 188 franchisee-owned Representative Studios over the Measurement Period (the “Franchisee-Owned Studios”), and 140 of those Franchisee-Owned Studios utilizing all “New Model” updates to the System implemented in 2015 (“Franchisee-Owned New Model Studios”).

Franchisee-Owned Studios